2 Answers
2

It's in the file /etc/lightdm/unity-greeter.conf. Open it with gksu gedit /etc/lightdm/unity-greeter.conf from a terminal or run dialogue. Set background= to whatever file you would like.

However make sure that file is accessible to all. It can not be in an encrypted home folder or such. The problem you have is most likely due to unity-greeter for some reason can't access the file you chose.

What's weird, is that warty-final-ubuntu.png is actually a Jpeg with a PNG extension. Don't believe me? Open it in Gimp, or right-click, go to the Image tab, and look. (The Summary tab names it as PNG, just because of the extension, but the Image tab actually looks at the data, or at least the header.)
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JamesTheAwesomeDudeJan 15 '13 at 21:20